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WASHINGTON (November 19, 2014) – The Environmental Protection Agency’s proposal to curb carbon pollution from power plants overestimates the electric power industry’s compliance costs by as much as $9 billion, according to a Natural Resources Defense Council report. Using current data, the report shows, the power sector and its customers could actually save nearly $2 billion in 2020 while meeting the EPA’s carbon reduction targets.

In its first detailed analysis of the agency’s Clean Power Plan, NRDC found that greater reliance on renewable sources of energy and on using energy more efficiently would produce substantial savings to the industry—and to its millions of customers.

“It’s clear that EPA has ample room to significantly strengthen the Clean Power Plan, making deeper cuts to dangerous carbon pollution from power plants at a reasonable cost,” said Starla Yeh, the report’s co-author and a policy analyst in NRDC’s Climate and Clean Air Program. “It can do so relying more on energy efficiency and clean energy—such as wind and solar energy—which can help slash America’s biggest source of heat-trapping pollution.

“The good news is that we can afford to tackle the growing threat of climate change and, really, we can’t afford not to. Doing the right thing will save money even as we protect our health, our communities and future generations.”

NRDC’s issue brief, published today, identifies and corrects two central shortcomings in EPA's blueprint -- and thereby refutes claims from some that the agency's plan would prove costly to the industry and its customers.

First, EPA overestimated the cost of deploying increased amounts of energy efficiency by nearly double current projections. Second, the agency used outdated cost and performance estimates for renewable electricity generation that were nearly 50 percent more expensive than current experience shows.

By factoring in more accurate and current cost and performance data for energy efficiency and renewables, NRDC found that EPA’s targets for curbing power plant carbon pollution can be met at a savings for America’s power sector, rather than an additional cost. And because power generators will spend less to cut carbon pollution, customers will save as well.

Using up-to-date data sharply increases the net benefits of the power plant standards. EPA estimated that including health and environmental benefits as well as compliance costs, its proposal would produce net benefits of up to $50 billion in 2020 and up to $84 billion in 2030. NRDC’s analysis shows that the net benefits would be $9 billion higher than EPA’s estimates in 2020 and $15 billion higher than estimates in 2030.

As drafted, the EPA’s Clean Power Plan aims to curtail power plant carbon pollution 26 percent in 2020 and 30 percent in 2030. It sets state-specific emissions targets and then provides flexibility for the states to work with utilities to meet those targets in the most cost-effective way. To meet their carbon pollution targets, power companies can change the mix of plants from which they generate power, bring in renewable energy (like wind or solar), or help utility customers use energy more efficiently in their homes and businesses,

In its report, NRDC updated the EPA’s cost and performance data for renewable power and energy efficiency to reflect current costs. NRDC provided these new data to ICF International and asked ICF to run the Integrated Planning Model (IPM®) -- the same model that EPA used to analyze its proposed rules -- using the same state targets, but with the updated cost and performance data.

The report shows:

EPA’s proposed state targets could be met at a total savings of $1.8 billion to $4.3 billion in 2020, instead of EPA’s estimated costs of $5.5 billion and $7.5 billion.

Total savings would reach $6.4 billion to $9.4 billion in 2030, instead of the EPA’s estimated costs of $7.3 billion and $8.8 billion.

In 2030, energy efficiency savings could total 140 terawatt-hours more than what EPA projected. Renewable generation could be 143 terawatt-hours higher than EPA’s projections. Collectively, that’s equivalent to the electricity used by 26 million homes in one year—roughly the population of the New York and Chicago metropolitan areas together.

These issues in NRDC’s issue brief will be addressed in more detail, along with other observations and recommendations, in NRDC’s formal comments that will be submitted to EPA by December 1, which is the end of the public comment period for EPA’s power plant proposal. The agency is expected to review public comments, which now total about seven million, make needed adjustments, and issue final standards to reduce power plant carbon pollution by June 2015. Then, states are to step forward with State Implementation Plans to put the standards to cut carbon pollution into effect in their states.